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Monday, 09 February 15
AUSTRALIAN COAL PRODUCERS BEST POSITIONED IN OVERSUPPLIED MARKET; US MINES MOST AT RISK - WOOD MACKENZIE
 In a 2015 global coal outlook report, Wood Mackenzie says that Australia and Indonesian coal suppliers will see some upside in the difficult months ahead as they continue to capture market share of coal exports from higher cost producers. Further modest productivity gains, the rapid fall in oil prices and currency devaluation in Australia and Russia will help lower costs. Therefore, Australian mines stands in a relatively strong position compared with higher cost suppliers - particularly those in the US - which are at much greater risk of closures this year. Even with increased closures and reduced US supply, Wood Mackenzie says they do not foresee sufficient volume exiting to balance the market and support price recovery. Lower-than-anticipated demand, especially from China combined with persistent production will be key factors that will sustain the weak market environment.
Australian producers best positioned in 2015
Mr Rory Simington, Principal Asia Pacific Coal Analyst says, “Australia is a standout competitor in both the metallurgical (met) and thermal coal trade, but particularly the former. Comparing 2014 from 2013, while global met coal import demand reduced by about 8 Mt, Australian exports rose by around 14 million tonnes (Mt), growing seaborne market share from 58% to 64%. The scalability of Australian mines and their high coal quality has enabled the displacement of major competitors in US, Canada and Indonesia. This trend is likely to continue thanks to a continued strong operating performance plus currency depreciation. On the other hand, US suppliers, many of which exhibit high costs, will not see the cost relief that currency devaluation brings to Australia.”
Furthermore, increased competition will come from higher Mozambique exports this year as Vale’s Nacala transport corridor ramps up indicating another year of aggressive pricing as producers fight to secure sales. In thermal coal, Australian exports were also strong, leaping 20Mt despite seaborne demand remaining essentially flat last year.
Lower costs discourage large-scale shutdowns
Despite a traumatic 2014 for the coal industry, mine shutdowns were relatively muted. Mr Simington explains, ”In fact metallurgical supply reductions were more than offset by the reduction in Chinese import demand, resulting in increased overcapacity. Although overall closures will accelerate this year, they will unlikely redress the imbalance.” Costly take or pay obligations in the event of closure, makes it more expensive for mines to shutdown than operate at a loss. As such, they remain in production and hamper the return to tighter market conditions. The recent low oil price and exchange rate has driven cost relief for Australia, Indonesia and Russia, which will further reduce the likelihood of wholesale supply cuts as well as delay any price recovery.
China uncertainties depress demand in oversupplied market
China’s economic rebalancing will continue to affect power demand growth and therefore thermal coal requirements. Of critical importance to the seaborne trade will be the effects of Government policies designed to protect the environment as well as domestic coal suppliers. Mr Robin Griffin, Research Director for Global Metallurgical Coal, says, “Current industry focus is on the new trace element restrictions for imported coal. We see most seaborne supply meeting the new guidelines but import levels are affected due to the uncertainty of the accuracy of coal quality tests and delays it may cause to the delivery process. Another big uncertainty to watch is the lengths to which the Chinese Government will go to protect its domestic industry.” Wood Mackenzie says stricter limits on imported coal quality is possible and the Government could make an aggressive move to waive the 17% value added tax (VAT) charged on coal sales which could considerably enhance the competitiveness of Chinese coal and enable some of the best quality and lowest cost Chinese coking coal to compete into Japan, South Korea or Taiwan. Should this occur, worsened oversupply conditions could occur in 2015.
Mr Griffin says “As China makes up 22% of seaborne trade and is expected see continued domestic oversupply, the country will be a major cause of depressed global import demand this year. Market fundamentals outside of China also remain uninspiring, for both metallurgical and thermal coal. Under such circumstances a material price recovery is unlikely this year”.
M&A activities to pick up in 2015
“Mine asset valuations have fallen considerably over the last three years due to the weakening market. Whilst low prices endure more companies will look to shed assets, perhaps to decrease debt or to allow a greater focus on their highest value operations. The negative price environment will persist through 2015 but not forever. Given our expectation of long term strength in coal demand fundamentals, the present market conditions offer a window of opportunity for both suppliers and buyers to consolidate their positions in the industry. We expect M&A to start picking up this year particularly for companies who want to gain a foothold in the industry for the long term.”
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions
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Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too ...
Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
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- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Australian Coal Association
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Economic Council, Georgia
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- White Energy Company Limited
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
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